b) If the elasticity of demand for a firm's product is 2, what will happen if the price is reduced by 5%? (3 marks) c) If the elasticity of demand is 1.2, what reduction in price would be necessary to increase the quantity sold by 20%? (3 marks) 2. If a country's MPC is 0.75, what would be the net effect on GDP of the government increasing both taxes and spending by $80 million? (6 marks)